Market-wide Circuit Breaker is a measure employed by stock exchanges to prevent extreme volatility in the markets by halting trade for a defined time frame when the broad market index rises or falls by a certain percentage over the previous day closing level of the index.
In India, the index-based market-wide circuit breakers are deployed at 3 stages of the index movement, either way viz. at 10%, 15% and 20%. The market wide circuits are applicable to both the equity and equity derivative markets.
The circuit breakers are triggered by movement of either the BSE Sensex or the NSE Nifty, whichever is breached earlier. Once the circuit is breached, both the markets namely the NSE and the BSE will halt trading for the per-defined time frame.
Post each halt triggered by a market wide circuit breaker, the market shall re-open with a pre-open call auction session.
The following table captures the duration of the market halt and pre-open session:
|Trigger limit||Trigger time||Market halt duration||Pre-open call auction session post market halt|
|10%||Before 1:00 pm.||45 Minutes||15 Minutes|
|At or after 1:00 pm upto 2.30 pm||15 Minutes||15 Minutes|
|At or after 2.30 pm||No halt||Not applicable|
|15%||Before 1 pm||1 hour 45 minutes||15 Minutes|
|At or after 1:00 pm before 2:00 pm||45 Minutes||15 Minutes|
|On or after 2:00 pm||Remainder of the day||Not applicable|
|20%||Any time during market hours||Remainder of the day||Not applicable|